Hospitals see another month of slim margins

U.S. hospitals saw slim to negative operating margins in February as the effects of the pandemic dragged on, according to a new report from healthcare consulting firm Kaufman Hall. 

In February, the median operating margin for hospitals was minus 0.5 percent, not including federal aid from the Provider Relief Fund. With the federal funding, the median operating margin was 0.4 percent. Without the federal aid, the median operating margin in February dropped 3 percentage points year over year.

Overall revenue, not including federal funding, fell 4.6 percent in February compared to the same month in 2020. Inpatient revenue dropped 4.4 percent, and outpatient revenue declined 5.5 percent year over year. 

"While decreasing COVID-19 hospitalizations are a promising sign, hospitals and health systems remain in a tenuous position, as the declines come as many healthcare consumers remain reluctant to seek outpatient services," Kaufman Hall wrote in the National Hospital Flash Report. 

In February, adjusted discharges fell 13.8 percent, adjusted patient days decreased 8.3 percent, and emergency department visits dipped 26.8 percent, when compared to February 2020 levels.

Expenses also remained above the prior-year levels in February, Kaufman Hall said. For example, total expense per adjusted discharge increased 19.6 percent, and drug expenses per adjusted discharge was up 29.1 percent. 

View the full report here. 

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